Auto-enrolment needs leadership from Government
THE Pensions Framework introduces the concept of auto-enrolment into a pension for all individuals with no existing pensions held either personally or via an employer arrangement.
It is expected that the contribution will total 8pc, which is broken down between employer, employee and Government (through tax relief).
However, there are a number of concerns over the auto-enrolment proposal:
- It gives the impression that an 8pc contribution is sufficient for a respectable pension at retirement age.
- Employers paying higher amounts into existing pensions may reduce those contributions to the auto-enrolment levels.
- The opt-out clause reduces the gravitas of auto-enrolment simply because the employee can opt out of the arrangement.
While everybody has the right to decide whether to contribute to a pension or not, it is incumbent on the Government to show leadership when it comes to this issue.
The auto-enrolment facility should be the cornerstone of the government's pension strategy and not the "ah sure give it a go and if you don't like it you can always leave it" strategy that it would appear to be.